Mobile Partners: Amazon's Fire Smartphone Is A Strategic Ecosystem Play, Not An iPhone Killer


There has been much debate as to whether Amazon's Fire smartphone will be able to compete with Samsung and Apple.

But according to many solution providers, competing with mobile heavyweights isn't Amazon's goal.

The Fire smartphone is a primarily aimed at making it easier for customers to access Amazon's online store and to sell things through Amazon, Douglas Grosfield, president and CEO of Xylotek Solutions, an Ontario-based solution provider, told CRN on Friday.

The Fire smartphone starts at $200 with a two-year AT&T contract, or $650 without. Solution providers don't believe Amazon will make much money on the device itself, but will benefit from the device's ability to bring more new customers into its ecommerce ecosystem.

[Related: Five Up, Five Down: The Good And The Bad Of The New Amazon Fire Phone ]

"[Amazon] is not trying to be an ‘iPhone killer.'" said Michael Oh, CEO of Tech Superpowers, a solution provider based in Boston, Mass. "They are making an alternative phone device for people who like the Amazon ecosystem."

"However many Amazon sells, they’ll be perfectly happy because they are locking those people into its ecosystem. Theoretically, even a small number of users is going to bring money to them for the long term," Oh told CRN.

While some critics have panned the Fire for being too similar to existing smartphones on the market, Oh thinks Amazon will be able to attract a respectable number of customers.

"I don’t think they need to sell that many phones to recoup their investment in it. They just need a few thousand, and I think they’ll be able to do that. It’s not a bad offering by any means," Oh said.

Other partners aren't as optimistic as Oh, however. Some are comparing the device to the HTC First, also known as the "Facebook First," which was discontinued just one month after hitting the market.

“I personally think this phone is going to be a flop,” said David Felton, owner of Canaan Technology, a solution provider based in Norwalk, Conn. “The only way it won't be is if Amazon can make their streaming service compete with iTunes.”

Felton, like many other solution providers, believes Amazon's ecosystem will attract customers to the Fire. He said it's imperative for the smartphone to be comparable to Apple’s iPhone in terms of features and functionality.

Universal Music Group has become a hurdle for Amazon in that competition. It hasn't yet come to financial terms with the Amazon regarding its music streaming service, Prime Music. Amazon released the software without closing a deal, meaning users cannot access any artist from the largest music corporation in the world.

"Universal will say, ‘they need us more than we need them,’ Felton said. "But if there is a demand for the Fire phone, then Universal might warm up to Amazon."

Both Felton and Oh used the word “gimmick” when describing Fire Phone’s 3D feature, called Dynamic Perspective. They don't think it'll be attractive enough to sway customers from buying iPhones and Android smartphones.

 On the other hand, AT&T partners are delighted about the carrier's exclusive arrangement to sell the Fire smartphone. They're predicting big sales once the phone hits AT&T store shelves, and they aren't concerned with some of the negative early reviews of the device.

"I heard similar commentary about the iPhone back in 2007, with people saying it wouldn't compete with BlackBerry. Times have changed,” said Max Silber, executive director of mobility at MetTel, a New York-based AT&T partner. “It’s absolutely beneficial to AT&T stores. Anytime you have an exclusive network phone it’s beneficial having that first mover advantage.”

Silber believes people are underrating the advancements that Amazon’s smartphone will bring to the enterprise, like the "Mayday" feature, which lets users get instant support from a customer service rep.

"This is going to be a game-changer for enterprises that choose to adopt the device," Silber said. Companies whose internal help desks are swamped with end-user support requests will be able to offload some of that work to Amazon with Mayday, he said.